Atkinson Stainless Steel Fabrication Company (ASSFC) are specialist in designing and fabricating the stainless steel tanks for pharmaceutical, Food and Chemical industries. Kaza Pharma Inc. (KPI) gave the first order to supply twelve units. ASSFC produced and delivered these twelve units to KPI. Three departments are involved, design, engineering, and quality, where learning differs. The first unit produced by ASSFC took 36 hours from the engineering department, 23 hours from the design department and 18 hours from the quality department. Material and other costs for each unit are fixed at $672 per unit. ASSFC determined a learning rate of 75% in engineering department hours, 85% in design department hours and 65% in quality department hours. ASSFC pay $45, $42, and $48 per hour to their workers in the engineering, design, and quality departments, respectively. Kaza Pharma Inc placed a first follow-on contract (second order) for 33 units immediately after receiving the first order. Learning in all three departments continues, and the ASSFC pay rate, material, and other costs are not changed